PDC Energy follows a simple but effective business strategy: grow reserves and production while increasing income and cash flow. To do so the Company focuses on low-risk development of natural gas and oil reserves from shales and tight reservoir rocks, combined with exploratory drilling and acquiring properties with positive development potential.
Geographical diversification is one way to reduce the risk levels associated with natural gas and oil drilling, production and marketing. PDC Energy operates in three geographically distinct areas of the country:
Currently, the majority of the Company’s natural gas production comes from two areas in the Rocky Mountain Regions:
Drilling and development
2010 was another solid year for PDC. PDC Energy is a cost-efficient producer; three-year Finding and Development (“F&D”) costs are 13.5% lower than their peer group average. Annual production from continuing operations for year-end 2010 was 37.6 Bcfe, and proved reserves at year-end 2010 totaled 860.6 Bcfe. During 2010 the Company drilled 213 gross, 170.1 net, wells, and also sought to optimize the value of existing wells through a program of well recompletions and refractures; PDC recompleted and/or refraced a total of 40 wells during 2010.
PDC Energy takes a conservative financial approach to its business. As part of its risk management strategy the Company markets its natural gas and oil through a wholly owned subsidiary, Riley Natural Gas (“RNG”). With RNG managing its natural gas and oil marketing, PDC maintains better control over sales and derivative activities. PDC uses natural gas and oil derivatives contracts to reduce the effects of volatile commodity prices.